Fiery Hot Startup Instagram Hits Version 2.0, Nears 10 Million Usershttp://www.businessinsider.com/instagram-version-2-0-update-2011-9/comments
en-usWed, 31 Dec 1969 19:00:00 -0500Tue, 03 Mar 2015 20:01:38 -0500Ellis Hamburgerhttp://www.businessinsider.com/c/4e78d99decad048845000012dlmcdonoughTue, 20 Sep 2011 14:21:17 -0400http://www.businessinsider.com/c/4e78d99decad048845000012
I think we will eventually look back on articles like this one in the way we look back today on people who said "this time it's different" in 1999. Yes, I know: "Extreme capital efficiency...It's different this time!" Three problems, (at least three...):
1) If these companies get enormous valuations, that are not justified in the long run by actual cash flows, then it won't matter how efficient they are with capital: Investors will lose a lot of money.
2) The world economy is teetering, and yet these companies, and their investors, seem to assume that they can bank on "raising another round" for years to come, at ever higher valuations...
3) Every entrepreneur knows that the hardest thing to do is to turn a profit. Product is hard, strategy is hard, recruiting is hard, management is hard...But turning a profit requires a company to balance all of these hard tasks, better than its competitors, including the ones who are burning venture capital in order to give your product away for free...that is vastly more difficult than making a cool product that millions of people are willing to use for free.
And yet article after article on this new breed of super high growth, zero-revenue companies continue to refer to revenue, (never mind "profit"), as something that will be "figured out" later...that is just crazy...and it will seem obviously crazy in retrospect.